Business Broker Newsletter Archives - Page 4 of 7

Business Broker Newsletter, Business Brokerage Consultant

The Montana Group: Our Story

Oct 4, 2017 by The Montana Group 0 Comments Established Business Broker

The Montana Group: Our Story

The Montana Group, unlike most in our industry, does not charge a retainer to manage the process of selling a business and our listing agreement allows the seller to cancel the agreement if so desired. We feel that we should be paid only if successful. We, too, are entrepreneurial as we put our faith (not the company owner’s money) behind our decision to accept the assignment to sell a business. Our fee structure was developed to align us with our client’s interest, maximizing the proceeds from the sale. This is accomplished by increasing the fee percentage only after our client’s minimum acceptable price is exceeded. We have many happy clients who will enthusiastically confirm that this arrangement was extremely beneficial to them.

Over the years, The Montana Group has developed a nationwide network of active private equity investors (500+) with a minimum fund of $50 million. These private equity buyers acquire or invest in profitable, mid-sized companies in the manufacturing, distribution and service industries. In our 25+ years, our buyers have ranged from New York Stock Exchange corporations to private equity groups to individuals purchasing a company for the first time. We thoroughly research potential buyers to determine not only their target markets and purchase strategies but to confirm their financial resources. Whatever their profile, our buyers look for established successful businesses with positive growth potential. These buyers are well-funded, motivated, and ready to act. And each of them is reminded of the need for confidentiality and a quick response. Our goal is total confidentiality….. a private and expeditious transaction.

How long does the process take? This is dependent on how soon the necessary information can be obtained from the Company but a normal benchmark is 6 months.
Any out-of-pocket costs? Only a reimbursement for our travel expenses to your company.
What business sectors? Manufacturing, Distribution, and Service.
Operating profit history requirements? Yes, a minimum of $1 million in annual pretax profits.
Geography? Continental USA & Canada.
What issues make selling the business difficult? – Significant reduction in sales & cash flow.
Can The Montana Group help position a business for a later sale? Yes, we have done this many times in our 25+ year history.
Can the Sale Process be low-key and relatively quiet where my employees, competitors, and customers will likely not know? Yes, this is often the request of our consulting client, the Owner.

Business Broker Newsletter, Business Brokerage Consultant

Buyer: Financial or Strategic

Sep 6, 2017 by The Montana Group 0 Comments Business Broker, Business Brokerage

Potential buyers of an operating business fall into one of two categories: Financial or Strategic.

Financial buyers are defined as those buyers who are strictly looking into acquiring a business as a good opportunity for an investment that is likely to increase in value. Unless a financial buyer has previously or is currently invested in a similar line of business each business stands on its opportunity to deliver a favorable return on their investment. So as a consequence each investment opportunity competes with the other such opportunities.

Strategic buyers are defined as those buyers who are already in the same line of business. This could be a direct competitor; a business that wants to expand its product offering by adding new related products; or a business operating in another trade area that wants to expand geographically. While logically it makes sense that such a buyer would be willing and justified to pay more for the acquired company because of the economies of scale, often this is not the case when comparing their price to those of financial buyers. This can be attributed to strategic buyers inexperience in valuing a business, something a financial buyer does continually.

There is also often a stark difference in the owner’s post-sale involvement. In the case of a financial buyer it is most often a requirement that the seller who manages the business continue to run the business for a period of time after the sale in order for continuity and because the buyer is not well versed in this type of business. Conversely, when the buyer is a strategic buyer the newly acquired business can incorporate the efficiencies of a similar business by eliminating management duplication, thereby increasing the overall profit of the combined businesses. So, when The Montana Group (www.montanagroup.com) is the consultant for the sale of a business we need to know the owner’s preference as to their involvement after their business is sold, which affects our selection of potential buyers.

Now that private corporate earnings are trending upward, a focus on selling a business is certainly more prudent. Particularly so, when well-funded buyers are numerous, the interest rates for acquisition debt is historically very low, and the recent economic improvement makes the business’ future appear brighter. In conclusion, “If your business is performing well financially and the business is making at least $2 million in pretax this is a great time to consider selling for there is pent-up demand from the buyside and the availability of companies to invest in is still lower than normal” says consultant Emmett Barnes, President of The Montana Group (www.montanagroup.com).

Business Broker Newsletter, Business Brokerage Consultant

Answer these Questions BEFORE choosing a Consultant to Sell a Business?

Aug 4, 2017 by The Montana Group 0 Comments Business Broker

Answer these Questions BEFORE choosing a Consultant to Sell a Business?

Of course, the idea of selecting someone to sell a major asset, a business, is something that is extremely important and could be daunting. However, addressing these considerations should be helpful before making the selection. Make site to check their personality as it is also important to enjoy working with the consultant. The process requires working closely together for months.

The firm’s list of completed transactions is of interested but make sure to review a list of completed transactions that were the responsibility of the person assigned to the sell your business. Also, determine what role this person will fill and what other people will be involved in the transaction and their individual experience for their upcoming responsibility.
Does the listing agreement benefit the consultant even if there is no sale? If this is the case, is this arrangement the proper motivation? If the consultant is confident in a sale, is a retainer fee necessary? Can the listing agreement be terminate at any point without penalty? It seems mutually beneficial to discontinue a relationship that is not working toward the stated goal.
Get an understanding of how your business will be marketed. A shotgun blast to the masses will often get rumors started, which could be negative to employees, beneficial to competition, and not be effective. Do you want to approve all potential buyers BEFORE they receive anything on your company? Is the intermediary’s buyer database extensive and specific enough to contact less than twenty buyers whose acquisition criteria specifically make your business likely to be of interest? This selective buyer focus will help reduce the opportunity for “the company is for sale” rumor and yet often obtain the financial objective…. quietly. There are, however, times that the “wide net approach” is best.
Does the listing agreement properly motivate the consultant to exceed the business owner’s price objective? This can be accomplished by agreeing to a flat fee to the minimum acceptable price with a higher percentage on that amount that exceeds this minimum.
Check references from owners who sold their business through this intermediary. It is particularly helpful if that business is of similar size.
Your consultant should approach the confidential sale process from the perspective of the owner/seller. This means a genuine interest in finding the best fit for the transaction goals and also for the company post-sale.

Now that private corporate earnings are trending upward, a focus on selling a business is certainly more prudent. Particularly so, when well-funded buyers are numerous, the interest rates for acquisition debt is historically very low, and the recent economic improvement makes the business’ future appear brighter. In conclusion, “If your business is performing well financially and the business is making at least $1 million in pretax this is a great time to consider selling for there is pent-up demand from the buyside and the availability of companies to invest in is still lower than normal” says consultant Emmett Barnes, President of The Montana Group (www.montanagroup.com).

Category: Business Broker Newsletter

The Montana Group: Our Story

Buyer: Financial or Strategic

Answer these Questions BEFORE choosing a Consultant to Sell a Business?

Potential Stumbling Blocks During the Sale Process